It has taken a court case to reveal the truth behind many foreign investments targeting businesses reserved for locals only. This is the case where a young Samoan woman claims to have been used as the “local face” of the business.

The matter was mentioned in court on Monday. The Samoan National Provident has brought a Chinese-owned company which took a loan of $4 million and accrued to an unpaid $7 million over the years.

Samoa’s National Provident Fund's (SNPF) lawsuit against Princessa Company and its directors alleged the company failed to make payments for the $4.6 million borrowed from the fund in March 2021. The term for the original loan is 15 years with varied agreements to increase repayments on the loan to $57,600 per month.

SNPF sought legal action against Princessa Company registered in Siusega with Xingai Chen (second defendant), Hongwei Chen (third defendant), Zhujian Chen (fourth defendant) and Faasao Chen (fifth defendant). The terms of the loan between SNPF and the defendants included security to be provided which is the mortgage over the property at Matautu legally described as Lot 926 in plan 5672.

SNPF alleged that despite the numerous demands the defendants have not been able to remedy and make any sustainable payment towards their loan account and the file was subsequently referred to the legal team in September 2023 for recovery.

The fifth defendant Faasao Chen is a Samoan who entered into a relationship with Zhujian (the fourth defendant) when she was 15-years-old before marrying him in 2010 when she was 18. According to Faasao, she did not complete her secondary school education and has limited formal education.

She claimed she was the “Samoan face” used by Zhujian and the other directors to set up their supermarket business trading as Princessa and obtained business licenses. Faasao claimed she was reliant on her ex-husband and obeyed his instructions when he needed business matters attended to as she was the local face dealing with government agencies and ministries. She was the one whose name was used as the owner of the business and the one who signed off on the loan.

She is one of many young women who have entered into such relationships either at their own will or through the beckoning of their parents who have been given substantial amounts of money. This particular case has brought out the human trafficking aspect of our society where daughters are sold into marriages. For foreigners, this is the gateway for opening businesses restricted to locals. In many cases, the foreign investor using the local woman’s name opens other such businesses and then sells those businesses to other foreigners.

It is good to see the government authorities tightening up these laxities that have allowed many to abuse the system over the years and set up businesses that should not be there leading to employing foreigners in jobs limited to locals. In recent weeks, the Ministry of Commerce, Industry and Labour and the Ministry of Customs and Revenue have stopped issuing new business licenses to foreigners, and new investment permits and there is a temporary hold on work permits as well. This is to allow the authorities to review the previous permits and clean up the system. It is much needed.

What also needs to be done is to hold locals who are part of the process that allows foreigners the gateway to enter into such businesses. The women who enter into marriages and the family members who facilitate such nuptials. There is also a need to set up a task force to investigate how many such businesses are based on one permit.

The defence put up the Samoan woman in the case is that she kept on signing documents including the loan papers without understanding what was taking place and thinking of it as normal business. The due diligence carried out by the lender has to be questioned but for now, that remains a matter for the court. It points out the need for stronger due diligence and makes the borrower fully understand what they are getting into.

The system has been exploited far enough. We need stringent laws with harsher penalties including for the local parties in such deals. Time to stop the exploitatation.